CALIFORNIA, HERE WE COME?

May 19, 2008

California's state budget has risen from $99.4 billion in 2000-01 to $142 billion in the current fiscal year -- nearly a 50-percent increase in state revenue. Yet California remains plagued by budget problems, and those problems may pale in comparison with those it can expect in the future, says J. Robert Mclure, President of the James Madison Institute.

For example:

California has a $50 billion un-funded liability for the future health care of retiring state employees, according to the Pew Center.

Despite ranking among America's most heavily taxed states, California is facing a budget deficit next year of more than $16 billion.

Much of the money reaching the state treasury is earmarked for various programs beyond the Legislature's control.

Meanwhile, as a result of California's projected $16-billion budget shortfall, the state is taking desperate but still inadequate steps in an attempt to curtail spending and balance its budget:

It has instituted a hiring freeze, and it has placed limits on travel.

It may even close several of its state parks.

California is even pondering an early release for thousands of the inmates in its pricey prison system, where the guards' union has gotten such astronomical pay and benefits that the prison system receives 130,000 job applications a year for a handful of vacancies.

Source: J. Robert McClure, "California. Here We Come?" The Journal of the James Madison Institute, April 2008.